MANILA – Credit card issuers in the Philippines are not worried about a possible rise in defaults despite higher borrowing costs, the Credit Card Association of the Philippines (CCAP) said Friday.

“We don’t really expect higher default rates than what we’re having,” said CCAP chairperson Magdalena Surtida.

“We’ve seen the number of revolvers or the revolver rates stabilize this year since pre-pandemic.”

Revolvers are credit card users who don’t pay in full or pay just the minimum amount every month. In August, CCAP said 35 percent of credit card users are revolvers, while 65 percent pay in full.

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Surtida also noted that credit card loans have friendly payment terms.

“We have a lot of 0 percent installment, 0 percent interest in solid merchants that our credit card holders can leverage from, assuming they want to buy goods for their purchases or their needs…more or less these are always at 6 months installment terms,” she said.

“And if they want to have longer tenors, they can always approach their credit card issuers to avail of, for example, retail conversion, which means it’s a straight charge purchase and then you call your credit card issuer to convert these into installment.”

“But if they also have balances in their own issuers, they can always go to another one of their cards to have these converted into a balance transfer at a lower interest rates of 1 percent per month vs. the 3 percent interest rate,” she added.

Surtida also said the industry has an inter-debt relief program, where a cardholder can always consolidate outstanding balance from several credit cards into one, and make a payment arrangement with the lead bank or with the lead credit card issuers for a longer payment term with a lower interest rate.

At the CCAP’s 43rd anniversary forum, Surtida said the industry generated P619 billion of credit card receivables as of June 2023— 29 percent higher than in the same period last year.

Year-to-date, the industry saw card spending increase by 39 percent to P853 billion. Cards that were being used grew modestly at 14 percent to 12.2 million.

Surtida said she expects more Filipinos to keep using their credit cards, even as the prices of goods rise.

“We are the only payment instruments that have the longest payment terms, so you have actually free interest credit up to 50-51 days from the time you purchased your goods up to the time that you’re supposed to pay,” she said.

“So those things are I think good ways to navigate during this inflationary environment, which is actually good for those who are new to bank or those who are unbanked, because you’re able to stretch your purchasing power up to 51 days from the time of transaction to your due date,” she said.

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